Oil fell in New York, after closing last week at a one-year low, on concern that Greece will default on debt payments, leading to slower economic growth and fuel consumption.

Futures slipped as much as 2.3 percent after dropping 17 percent since the end of June in the worst quarter since 2008. Reports this week may show manufacturing in the U.S., the world’s biggest oil consumer, barely grew last month, while job growth failed to cut unemployment. European finance ministers meet today in Luxembourg to weigh the threat of a Greek default. Saudi Arabian Oil Co. canceled a crude shipment to Royal Dutch Shell Plc after a fire at Shell’s largest oil refinery.

“A Greek default is becoming more and more likely amid reports the country will miss debt-reduction targets,” said James Zhang, a strategist at Standard Bank Plc in London, who forecasts Brent will average $98 a barrel this quarter. “The weaker euro and falling equity market are pulling oil prices lower.”

Crude for November delivery fell as much as $1.84 to $77.36 a barrel in electronic trading on the New York Mercantile Exchange and was at $78.09 at 9:21 a.m. London time. The contract fell 3.6 percent to $79.20 on Sept. 30, the lowest close since Sept. 29, 2010. Last quarter’s decline was the biggest since the three months ended Dec. 31, 2008.

Brent oil for November settlement slid 83 cents, or 0.8 percent, to $101.93 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $23.84 to New York crude, compared with a record of $26.87 on Sept. 6.

U.S. Manufacturing

“It’s a confidence issue,” Jonathan Barratt, a managing director of Commodity Broking Services Pty in Sydney, said by telephone today. “Economic data in the U.S. hasn’t been all that terrible, but we will focus on the employment figures at the end of the week to see whether they are improving.”

The U.S. Institute for Supply Management’s factory index fell to 50.3 in August, according to a Bloomberg survey of economists before a report today. A reading of 50 is the dividing line between contraction and expansion. The jobless rate held at 9.1 percent for a third month, according to a separate Bloomberg survey before Labor Department data Oct. 7.

Sentiment among Japan’s largest manufacturers is worse than before the nation’s March earthquake and tsunami, the quarterly Tankan index showed today. Japan accounted for 5 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy.

Force Majeure

Saudi Arabian Oil canceled one cargo of 2 million barrels of crude to Shell and is discussing canceling a second, according to people with knowledge of the matter. Shell declared force majeure, exempting it from fulfilling contracts, as it halted units after the worst fire in 23 years at its 500,000- barrel-day Pulau Bukom refinery in Singapore. The company declined to specify how many customers are affected or how long the measure will be in place.

The Organization of Petroleum Exporting Countries’ oil output in September rose to the highest level since November 2008, with a Saudi cut was offset by Iraqi and Libyan gains, a Bloomberg News survey showed. Production increased 75,000 barrels to average 30.055 million barrels a day, according to the survey of oil companies, producers and analysts.

Fighting in Libya reduced the availability of light, sweet crude, or oil with low density and sulfur content. The country’s output fell to 45,000 barrels a day in August, according to Bloomberg estimates, compared with the 1.6 million barrels a day in January. The nation pumped 100,000 barrels a day last month.

Hedge funds cut bullish bets on oil by the most in seven weeks on concern that economic growth will falter. The funds and other large speculators reduced wagers on rising prices by 7.4 percent in the week ended Sept. 27, according to the Commodity Futures Trading Commission’s Commitments of Traders report released Sept. 30. It was the largest decline since Aug. 9.

Bloomberg